Several Grundfos experts shared their opinion with Pumps & Systems on how the company and industry responded to the COVID-19 pandemic and what lies ahead in 2021.
The panel included:
Gregory Bretz, Vice President of Sales for Commercial Buildings
Robert Montenegro, Vice President of Sales for Water Utility
Kirk Vigil, Vice President of Sales for Domestic Buildings
Dan Story, Vice President of Sales for Groundwater and Irrigation
P&S: Can you tell me if the pandemic has impacted your operations at all and if so, how?
Greg Bretz – Commercial Buildings
Like almost everyone, the pandemic has had a profound effect on how we do business. Our operations colleagues have been heroic in their efforts as essential workers, keeping our business going and keeping critical infrastructure up and running. While our other functions have been operating in full work-from-home mode for 8 months. It’s forced us to rethink how we do business and interact with customers. I suspect that many of these learnings will be used in a standard way going forward, even after the pandemic has subsided. Fortunately, our business in the Commercial Building market has been quite resilient and we’ve found ways to continue growing. One of the keys to our resilience in these tough times has been our partner network. We have some of the best partners in the industry; they’ve continued to stay in front of customers where possible as we’ve been unable to travel.
Robert Montenegro – Water Utility
Like almost everyone, the pandemic has had a massive impact and effect on our business and our teammates. We had some initial operational (production) challenges related to the flow of components, global procurement and uncertainty in the workplace, but we acted quickly and decisively to make the appropriate adjustments and have been running full speed since early in the pandemic. Sales and sales support staff have all been working from home since early March, and the teams haven't skipped a beat. In fact, many of our functions are performing better. Certainly, our customer interactions have changed dramatically, with essentially all meetings taking place virtually. Many of our end-users, consulting engineering firms and other parties engaged in the system are either working with reduced staff or are 100% remote, making in-person visits impractical. One of the keys to our success is the strength of our rep and distribution network. They are the local voice of Grundfos, and our success is directly tied to their strengths in the markets they serve. They have proven to be quite resilient and tough in their endeavors!
Kirk Vigil – Domestic Buildings
We saw a dramatic impact in March and April when business shut down and were uncertain of what to expect. Since then, we have seen our market space rebound. However, the traditional flow of domestic business has been replaced by huge swings month over month. The term I use is the flow of order has become “lumpy”, whereas buyers are attempting to leverage buying opportunities and manage lower inventories, keeping inventory risk as low as possible. Overall, business has remained strong and active.
As we remain shut down with restricted travel, our sales teams have adjusted to virtual meetings and events with partners. We have discovered that limiting travel has afforded us time to focus on opportunities in the market. Scheduled virtual meetings have proven to be more efficient than traditional travel and sales calls.
Dan Story – Groundwater & Irrigation
The pandemic has impacted all parts of our business. All non-essential personnel are working remotely, which means our customer service centers and sales teams are working from home. Our supply chain has taken great measures to protect employees while ensuring a stable supply of product for our customers. This involves not accepting guests into our factories, instituting “home base” where employees in an area do not mix with employees in another area; wearing masks; social distancing; and more. While we have had some challenges, product delivery has remained stable in 2020.
P&S: What are the positives you’re looking at going into 2021?
Greg Bretz – Commercial Buildings
We look to build on the momentum we’ve established over the past few years by continuing our growth in 2021. We do expect significant headwinds once again. However, our solutions—especially Grundfos packaged Hydro MPC systems—are well suited to accelerate project timelines and reduce risk, adding value to projects that have been slowed by the pandemic. The added time working from home in 2020 has also allowed our sales teams to spend more time training and leveling up to add more value to our customers in 2021.
Robert Montenegro – Water Utility
Our business/opportunity pipeline remains strong. Our rep and distribution network remains strong and committed; we have made significant improvements to this partner team that is now paying dividends. And the fact is, municipal water and wastewater demands don’t stop during a pandemic. We have a great team that is working hard to deliver on all opportunities, and we will continue to be a truly essential business.
Kirk Vigil – Domestic Buildings
We believe the market and customers will continue to adapt to the new reality of doing business during a pandemic and we will carry forward lessons learned. We expect business and life to change. We have learned that we can effectively engage with partners and customer online. We have been able to develop practices that help us communicate more effectively with the market. With much less travel, we have more time to pursue opportunities we may have overlooked in the past.
One positive in 2021, compared to 2020, is that the pandemic will no longer be a surprise. There will be far less anxiety and more acceptance for the reality of how we need to manage the markets and our business.
Dan Story – Groundwater & Irrigation
We are very fortunate to be in an essential business, and demand has been solid in 2020. In the groundwater and irrigation markets, favorable weather and a strong residential market has led to market growth. We expect this to continue into 2021. The election will also be behind us and remove uncertainty. The hope is that things will begin to normalize in 2021 and we can travel to collaborate and build relationships in person again. Regardless of how long the pandemic persists, we are fortunate to have a strong operations team and the best partner network in the business that will continue to make it happen in 2021, just like they have in 2020.
What do you expect the challenges to look like for your business next year?
Greg Bretz – Commercial Buildings
Dodge estimates that commercial construction starts and spending will be down 16% and 10%, respectively, in 2021. In addition, many projects have been delayed or put on hold. With the project pipeline constricting, it is going to be very important that we find a way to get our solutions in front of decision makers, either remotely or in person. Many of our solutions are new and innovative, so it’s critical that we find a way to stay in front of our customers to counter the inertia of the status quo of old technology.
Robert Montenegro – Water Utility
Multiple challenges face the business. Local, state, and federal budgets will be under pressure for the foreseeable future. The business cycle and process will continue to evolve in the current and post-pandemic environment. Attracting and training new talent in a virtual world calls for different processes and skills than we’ve had to use historically. Meeting in person with partners and customers will continue to be a struggle for the foreseeable future. We will continue to evolve to convert on opportunities.
Kirk Vigil – Domestic Buildings
We do not expect the housing sector to be robust; it will be nominal. There is an expectation that consumer spending and discretionary spending will be conservative. This will create a more competitive environment in our domestic markets. We believe wholesaler inventories will continue to tighten and more inventory services, fast/accurate deliveries and other supply chain matters will be put on manufactures.
The pandemic has been good for online providers. They have raised the bar in consumer expectation for fast, on-time delivery. This expectation will continue to transition to commercial markets, and manufactures will aspire to improve logistics and leverage supply chains to create value in the market.
Dan Story – Groundwater & Irrigation
We will start the year with the same pandemic-related constraints that we adapted to in 2020. Grundfos and our channel partners will need to continue taking precautions to protect the health and safety of customers and employees. The biggest concern is the inability to connect with customers face-to-face and the long-term impact that will have.
How has your applicable industry been most affected by the pandemic?
Greg Bretz – Commercial Buildings
One of the biggest impacts on the commercial building industry due to the pandemic has been the uncertainty of some sub-segments. Education, healthcare and commercial office space are all examples of industries that may see long-lasting impacts due to the pandemic. The market will be reluctant to move forward too quickly until some of these questions have clearer answers.
Robert Montenegro – Water Utility
The water and wastewater market has been impacted in countless ways. Projects have been delayed or mothballed. Consulting engineers are working remotely and not seeing suppliers. Municipalities are working with reduced staff, meaning they have changed their operations and maintenance practices to cover only the most urgent needs (which will likely have a long-term impact on their operations and the health of their infrastructure). And there has been a shift from capital expenditures to operational budgets to manage the day-to-day activities, which will impact the financials of the municipalities.
Kirk Vigil – Domestic Buildings
Domestic or residential customers are either very conservative on spending or are using the shutdown as an opportunity to repair and replace in their homes. The replacement business seems to be unaffected; however, we are seeing new build opportunities slow down. As the pandemic becomes more normalized, I believe risk will soften and spending will accelerate. Comfort will be more a priority as more people spend time at home, and businesses that recognize the opportunity will succeed.
It is my belief that large group gatherings such as customer outings and trade shows will fade away. We have learned that alternatives are as effective and more efficient. Face-to-face meetings will be more critical, better planned and have higher expectations.
Dan Story – Groundwater & Irrigation
The groundwater and irrigation business is very relationship oriented. The inability to personally connect has had a profound impact. While we have largely been able to keep business going and keep people in water, we have been unable to collaborate in the way that leads to the most innovation.